Africa gets more diaspora money more than FDI

In 2014, Africans living in the diaspora sent home to their families approximately $62bn.

This money enters their various home countries as “foreign exchange”; in other words, it is like “export revenues”. So how then, does it compare to other export revenues, such as coffee, tobacco, gold, and oil?

Of the revenue sources above, only oil generates more revenue than the contributions of the diaspora through remittances. In fact, the contribution of the diaspora is double that of tobacco and gold combined. And, remarkably, it is higher even than that of tourism.

If you take Africa as a whole, the remittances income from the diaspora, $62bn, is greater even than the total Foreign Direct Investment (FDI), $55bn, and total foreign aid, just over $50bn. In some African countries, the income that comes from their citizens, working in the diaspora, is actually greater than what comes from export of major natural resources and agricultural production.

So in some countries, including Uganda and Zimbabwe, remittances constitute a significant portion of GDP. In Lesotho, the figure is around 30 per cent. Similarly, remittances to Egypt exceed the revenue from the Suez Canal, while in Morocco they are greater than tourism revenues.

Even in Kenya, a global tourism hotspot, remittances in 2014 at $1.5bn were quite close to tourism receipts at $1.8bn. The income sent home by Africans in the diaspora is actually not 100 per cent of their actual income.

If you assume that these people are employed, and that their remittances actually constitute, say 20 per cent of their net income, then they send home $62bn, every year, out of $310bn net income that they earn whilst working abroad. If Africans working abroad were a country, then we would say their GDP is $310bn.

This compares favourably to the GDP of some very large countries in Africa: Nigeria $522bn, Angola $124bn, Kenya $55bn. The contribution of the African diaspora to the foreign currency income of the African continent is quite extraordinary.

As I have shown above, if you strip out oil revenues, diaspora remittances (money sent home by Africans working outside their countries) is greater than all the mineral exports, and exports of agricultural cash crops like tobacco, cotton, coffee etc.

They send more money home than all the foreign direct investors put together, and they send more money home than is earned from tourism. They send more money home than is received from foreign aid.

Next time you see that waiter or construction worker, working as a migrant worker, spare a thought for them: they are building two nations at the same time, even if they themselves do not know it.

The writer is an African businessman and philanthropist